Judge Stays CFPB Payday Lending Rule Compliance Date
Inside Subprime: Nov 14, 2018
By Grace Austin
The Consumer Financial Protection Bureau had a longstanding August 2019 date in which it would reinforce that compliance, but an ongoing legal dispute between the CFPB and representatives from the payday loan industry has led to this early November decision.
It all stems from an initial April 2018 lawsuit brought by two trade groups who originally sued to block the CFPB’s payday lending rule, saying it was “overreaching, improper and harmful to both the industry and consumers,” as a Law360 article put it. The payday loan providers said that many of their businesses would be forced to close from the regulations.
The lawsuit stemmed from the payday loan industry groups’ unhappiness with a January 2018 announcement that the CFPB would look into revising or issuing a new payday lending rule. The trade groups argued that would mean they would have to comply with payday loan regulations that could arguably be changed soon, and they would potentially be unprepared for that change.
The original payday loan rule was finalized in October 2017 under former director Richard Cordray, an Obama-era appointee to the agency. The rule was designed to rein in the payday lending industry.
Now, the CFPB announced in October 2018 that those agency discussions about revising or issuing a new payday loan rule would start in January 2019.
That’s what led to U.S. District Judge Lee Yeakel’s latest decision to stay the compliance date.
Judge Yeakel earlier nixed plans, in June 2018 and August 2018, to stay the 2019 compliance date that would enforce more regulations for the payday loan industry, without offering much explanation to either party about his decision.
In June, though, he did pause the lawsuit, at the request of both the trade groups and the CFPB. They argued in May that the “process could lead to the rule’s revision or repeal, potentially mooting the case and creating uncertainty for payday lenders about what regulations, if any, they might wind up having to follow,” as Law360 explained it.
The payday lending trade groups and the financial watchdog agency both were seeking a compliance date of more than a year after the August 2019 date — but the judge hasn’t been specific on the timeframe.
Both sides have until March to file the next status report in the case.